Headphone Spat Pits Monster Against Upstart

Monster Cable Products has a well-known brand and a history of defending it aggressively in court. But its suit against a new rival to a high-profile line of headphones has some singular elements.

Fanny Wang Headphone Co.

Fanny Wang’s new product

The complaint alleges that Fanny Wang Headphone Co., a startup based in Danville, Calif., is selling “nearly identical” knockoffs of the Beats by Dr. Dre headphones distributed by Monster and produced by Beats Electronics–iconic products that resulted from a collaboration of the celebrity rapper-producer and music mogul Jimmy Iovine.

Those two companies sued Fanny Wang, alleging patent infringement, unfair competition and “trade dress” infringement, or trading off the reputation of Beats headphones in ways that could cause consumers to confuse the competing products.

Tim Hickman, a Silicon Valley entrepreneur who is Fanny Wang’s co-founder, insists it is Monster and Beats that are competing unfairly–by using an unfounded complaint, the prospect of heavy legal fees and a possible restraining order to hobble an original product.

A spokeswoman representing Beats by Dr. Dre didn’t immediately respond to a request for comment.

Legal action against improper knockoffs is not uncommon. U.S. Immigration and Customs Enforcement officials, for example, recently won a court order allowing the agency to seize 82 Web domains of companies suspected of selling counterfeit products, typically after ICE agents purchased samples of the knockoffs.

But that couldn’t happen in this case; Fanny Wang has not delivered any headphones to customers yet. Monster and Beats filed the suit in U.S. District Court in San Francisco on Dec. 14, the same day that Fanny Wang hosted a launch party at a hotel in the city.

Most patents are lengthy documents listing multiple claims that cover functional attributes of an invention. The 2007 patent cited in this suit is different; it does not cover any of the Beats headphones’ technical features, such as a signature bass-boosting audio quality that have made the product a hit in the hip-hop world. The patent has a page with a single claim, the “ornamental design” for a pair of headphones, followed by diagrams with different views of the product.

Monster’s complaint is based on photos and descriptions on Fanny Wang’s website. It notes that Fanny Wang boasts of relying on the same sound engineer in China who worked on the Beats headphones. “Due to his position, the engineer may have been privy to various specifications, technology and other information plaintiffs had deemed confidential information,” the complaint states,” warning that further investigation may result in additional claims against Fanny Wang or the engineer.

Hickman acknowledges that Fanny Wang’s products do borrow the Beats’ concept of a “unibody” construction, with a large single piece of plastic that wraps around a wearer’s head. He argues the design has become a trend in the industry that multiple companies in the industry are moving to adopt. “We don’t think the design patent covers that,” Hickman says.

Hickman says his company stumbled on the same engineer in China, who now works for a different contractor than the one who manufactures Beats headphones. But he says Fanny Wang took great pains to differentiate the physical shape and audio attributes of its headphones; they have what Hickman calls an “aggressive” wave-like pattern in the main piece of plastic, for example, compared to a smooth finish on the Beats models. “There is not a single part that is similar and it is not by accident,” he says.

As for how Fanny Wang headphones sound, its website states that consumers “will be blown away at the sound quality which rivals Beats by providing a forceful bass (without over doing it) while keeping a very clean sound.”

Hickman does acknowledge emulating the way Beats helped turn headphones from generic audio tools to fashion items aimed at specific audiences. Besides Beats, a favorite of rap fans, Skullcandy has built a huge franchise by going after the skateboard-type crowd, Hickman says.

So Fanny Wang went after a different audience–consciously targeting women who want to look stylish, Hickman says. Its website says it is recruiting “girlz,” or models that will be paid hourly to promote the headphones “in the clubs and on the streets.”

The Monster complaint seeks unspecified damages and an injunction that would prevent Fanny Wang from selling its products. Hickman contends one of the real goals is to prevent the company from attending the Consumer Electronics Show in early January to promote its products, which would cause his company to lose the $100,000 it has invested to have a presence at the big show.

“It’s not just about winning, but about hurting us,” Hickman says, who plans to respond aggressively, and publicly, to the suit. “I’m not going to be surprised if it’s a bit of a battle here.”

Retailers list Beats by Dr. Dre models at prices from about $180 to $400. Fanny Wang’s “on-ear” models start at $149.95 and are expected to be shipped at the end of December. Over-the-ear models are expected in February; pricing hasn’t been set.